MARKET REPORT: Losses fail to puncture appetite for Deliveroo

Deliveroo shares rose despite another year of thumping losses.

The takeaway delivery group gained 6.4 per cent, or 7.4p, to 123.95p after it reported a pre-tax loss for 2021 of £298million, wider than the £213million loss in 2020 but less than analysts had feared. 

Revenues grew 57 per cent year-on-year to £1.8billion while order numbers jumped 73 per cent to 300.6m, the top end of the group’s guidance range.

Shares up: Deliveroo gained 6.4% after it reported a pre-tax loss for 2021 of £298m, wider than the £213m loss in 2020 but less than analysts had feared

The wider loss came as the firm ramped up spending on marketing and investments in a bid to expand its share of the cut-throat delivery market in which it is beset on all sides by deep-pocketed competitors including Uber Eats and Just Eat (down 0.4 per cent, or 11.5p, to 2660.5p) as well as upstart rivals such as Getir and Gorillas. 

Deliveroo spent £628.7million on marketing and overheads last year, up from £358.5million in 2020.

Despite the surge in orders and its aggressive spending strategy, the company expected to remain unprofitable until at least the middle of 2023 while transaction volumes for this year were predicted to grow by 15-25 per cent compared to a 70 per cent surge in 2021.

Deliveroo boss Will Shu also warned of ‘headwinds’ in the coming year as the company grappled with inflation and the global impacts of the war in Ukraine.

Hargreaves Lansdown analyst Susannah Streeter said that as the cost-of-living squeeze intensified and savings were eaten away, consumers may have ‘less appetite’ for the convenience offered by Deliveroo’s services.

‘With many supermarkets and restaurants set to pass on the cost of higher commodity prices, more consumers may begin to trim budgets by starting with little luxuries like take-outs,’ she added. 

After floating to much fanfare in April last year, Deliveroo’s shares have declined sharply and are currently worth around 68pc less than its listing price of 390p.

The FTSE 100 climbed 1.3 per cent, or 93.66 points, to 7385.34 while the FTSE 250 rose 0.3 per cent, or 70.15 points, to 20975.69.

Stock Watch – Avingtrans

Engineering group Avingtrans climbed after landing several contracts.

Booth Industries, the firm’s security doors business, secured a £6million deal with a government agency. 

Two of the group’s other businesses, Energy Steel and Hayward Tyler, sealed multi-million-dollar deals to develop components for a water cooling system at the ITER project in France aimed at creating viable energy from nuclear fusion.

Avingtrans shares rose 4.3 per cent, or 17.5p, to 427.5p.

A move by the Bank of England to raise interest rates to 0.75 per cent following a hike by the Federal Reserve was taken in stride by the market. 

However, the outlook for central banks was becoming increasingly muddied as analysts questioned their ability to handle the uncertainty sweeping the globe.

‘Central bankers can’t both bring inflation under control and provide a soft landing for economies and markets which have been shaken by the conflict. They may well struggle to do either,’ said AJ Bell investment director Russ Mould.

Shares in UK-focused banks weighed on the FTSE 100 amid fears an economic slowdown could hit consumer spending and increase loan defaults.

Lloyds fell 1.2 per cent, or 0.61p, to 48p, Barclays slid 2 per cent, or 3.44p, to 171.72p and NatWest slumped 3.9 per cent, or 8.7p, to 212.7p.

Ticket app Trainline tracked up 7.1 per cent, or 14.2p, to 213.6p as its sales continued to recover from the pandemic despite the surge of Omicron variant infections in the fourth quarter of last year. 

The group reported £2.5billion of ticket sales for the year to the end of February, around 68 per cent of pre-pandemic levels, while earnings were expected to be at the top end of previous guidance of £35-£40million.

Pharma giant AstraZeneca received some good news as the UK medicines regulator approved its Evusheld Covid-19 antibody treatment for use in adults with immune systems that do not respond well to vaccines.

It also announced that its rare disease business Alexion had agreed to pay £591million to settle a patent lawsuit with Japanese drugmaker Chugai Pharma over its Ultomiris drug, which is designed to treat two life-threatening rare blood diseases. 

Shares were up 1.5 per cent, or 145p, at 9561p.

This post first appeared on Dailymail.co.uk